A company is investigating the benefit of investing in the development of a new product. The following are the expected costs and benefits from the new product. [1] Cost of development is estimated to be $100,000 for one year [7. The total tooling cost is $45,000 for 9 months and the first payment is 6 months after the start of the program. [1] The total cost of testing, which will start 3 months before the tooling is complete, is $50,000 and the testing will last 6 months [] The ramp-up cost is $25,000 for 3 months and will start in the middle of the testing. [7. Marketing will start 6 months before completion of testing. The marketing cost is $100,000/ year for one year [1] Manufacturing will be launched after a year and a half from the program start. The cost of manufacturing is $3 /product [] The selling price is $12 product [2] The marketing team has good indication that they can sell 25,000 items per year for 3 years [7] Assume a discount rate of 10% per year. Should the company invest in the product development? (15 Marks) NPV=periods(1+discountrate)periodperiodcashflow A company is investigating the benefit of investing in the development of a new product. The following are the expected costs and benefits from the new product. [1] Cost of development is estimated to be $100,000 for one year [7. The total tooling cost is $45,000 for 9 months and the first payment is 6 months after the start of the program. [1] The total cost of testing, which will start 3 months before the tooling is complete, is $50,000 and the testing will last 6 months [] The ramp-up cost is $25,000 for 3 months and will start in the middle of the testing. [7. Marketing will start 6 months before completion of testing. The marketing cost is $100,000/ year for one year [1] Manufacturing will be launched after a year and a half from the program start. The cost of manufacturing is $3 /product [] The selling price is $12 product [2] The marketing team has good indication that they can sell 25,000 items per year for 3 years [7] Assume a discount rate of 10% per year. Should the company invest in the product development? (15 Marks) NPV=periods(1+discountrate)periodperiodcashflow